Capital Gain or Sale?

claudialowe

Don't know if I am being blonde or not!!!!

I have got a client who has an internet trading business with various domain names. Last year they sold one of the names.

Is this is a capital gain or just a sale?

Many thanks.

Claudia

burg

This doesn't seem as straight forward as normal.

However my thoughts would be:-

When they bought the domain name it may well have just cots around £10. In which case I doubt it would have been capitalised? If this was the case I may well be inclined to just put it as a sale.

Hope this helps

claudialowe

Hi Burg

Thanks for your reply - I agree that it is not simple - hence the question. Client is still trading (albeit at a very low level), and has b/f trading losses that can be utilised.

Will carry on scratching my brain :confused1:

Claudia

JodieR

Have a read of UITF29 - I've been through it a number of times in the past few weeks & it's quite clear on what & when expenditure should be capitalised & what shouldn't, might be a good place to start!

T.C.

Whether something is capitalised or not can depend on the business. For example the buying and selling of property is not capitalised if the property is purchased with a view to re-selling after renovation, but would be if the property is kept as an investment and sold later.
Are these bought with a view to selling them or as a long term investment/use?
Does that help?

claudialowe

I think that I have finally sorted it out in my mind.

The sale was for stock and the rest was for the purchase of the domain name - so goodwill really.

It is therefore a capital gain.

The P&L and BS look odd with it as a capital gain, but look "right" as a sale - but then it would look odd from the VATman's point of view!!!!

Thanks for all the replies though.

Claudia